The company also admitted for the first time that the Serious Fraud Office and North Yorkshire police were investigating the circumstances surrounding a shortfall in its profits in 1991.
The SFO is understood to be focusing on the preparation of the report and accounts, which had to be restated, and dealings in the company's shares.
The refinancing proposals involve the exchange of pounds 40m of MTM's pounds 120m debts for 80 per cent of the enlarged equity. The banks will be subscribing for shares at an effective rate of 11p a share, the current share price.
Borrowing facilities, which expire at the end of June, will be extended for three years. The company said that it now had negative net assets.
MTM's problems began in March last year when two profit warnings were issued following the announcement that BDO Binder Hamlyn, the company's auditor, was unhappy with its accounting policies.
Chairman and founder Richard Lines, who had reduced his holding in MTM from 11 per cent to 7 per cent at 274p, close to the shares' record high of 289p, left the company after the shares collapsed to less than 30p.
In February Mr Lines sold his remaining 7 per cent stake to a Swedish company, AB Hebi, which called itself a 'trade investor'. At that time the company was negotiating a refinancing that looked certain to dilute existing shareholders heavily.